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Euro Area Economic Forecast

Euro Area Economic Outlook

GDP should rise timidly this year. A resilient labor market, stronger external demand, the disbursement of EU Next Generation funds and softer inflation will support activity, but the lagged effects of past interest rate hikes and ailing industrial production will run counter to growth. Potential financial turbulence, coupled with high public debt loads, poses a risk.

Euro Area Inflation

Harmonized inflation fell to 2.8% in January (December: 2.9%), on softer increases in prices for food, alcohol and tobacco, and non-energy industrial goods. Inflation will abate sustainably this year from 2023’s average owing to the lagged effects of previous monetary tightening and a high base effect. Wage-price spirals and commodity price spikes are upside risks.

This chart displays Economic Growth (GDP, ann. var. %) for Euro Area from 2010 to 2023.

2019 2020 2021 2022 2023
Fiscal Balance (% of GDP) -0.6 -7.1 -5.2 -3.6 -
Public Debt (% of GDP) 84.1 97.2 94.7 90.9 -
CBI Policy Rate (%, eop) 0.00 0.00 0.00 2.50 4.50
Exchange Rate (LBP per USD, eop) 1.12 1.22 1.14 1.07 1.10
Current Account Balance (% of GDP) 2.5 1.7 2.8 -0.6 1.8
Merchandise Trade Balance (USD bn) 334 379 328 -83 296
Merchandise Exports (USD bn) 2,667 2,481 2,958 3,107 3,144
Merchandise Imports (USD bn) 2,333 2,102 2,630 3,190 2,848
International Reserves (USD bn) 914 1,079 1,197 1,187 1,267
Money (ann. var. of M2 %) 5.7 11.0 7.1 3.6 -0.7
GDP per capita (USD) 40,006 38,890 43,679 41,929 45,800
Economic Growth (GDP, ann. var. %) 1.6 -6.2 5.9 3.5 0.5
Private Consumption (ann. var. %) 1.4 -7.8 4.4 4.2 0.6
Fixed Investment (ann. var. %) 6.5 -6.2 3.7 2.6 1.4
Industrial Production (ann. var. %) -0.7 -7.7 8.9 2.3 -2.4
Unemployment (% of active population, aop) 7.6 8.0 7.7 6.7 6.5

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